Following the news that the Paxos Trust Company will stop issuing the stablecoin BUSD due to being instructed by the New York State Department of Financial Services (NYDFS)1, PayPal has allegedly delayed the launch of its own stablecoin, reported Bloomberg citing anonymous sources.
Legislators and financial regulators have been calling for improved consumer protection, tax compliance, and anti-money laundering (AML) measures for cryptocurrencies, which has increased the regulatory scrutiny of stablecoins in recent months.
A stablecoin is a type of cryptocurrency that is created to have a stable value, usually pegged to a more stable asset like the US dollar. This means that its value remains relatively constant and doesn’t experience large price fluctuations like Bitcoin.
In January 2022, news broke that PayPal was in the process of developing its own stablecoin. From the start, PayPal was committed to working closely with regulators on this issue and was working with Paxos Trust to develop the “PayPal Coin”, hence this delay is no surprise considering the current landscape.2
PayPal’s relationship with Paxos
Paxos is a financial institution that provides infrastructure for the cryptocurrency industry. It was founded in 2012 and is based in New York City. The company is regulated by the New York State Department of Financial Services (NYDFS) and operates under a trust charter. Paxos offers a range of services for the cryptocurrency industry, including a cryptocurrency exchange, a stablecoin called Paxos Standard (PAX), and a platform for institutional cryptocurrency trading. Paxos also provides custodian services for cryptocurrencies, ensuring their safekeeping and security.
Paxos and PayPal are connected via PayPal’s cryptocurrency service. PayPal has teamed up with Paxos to give its customers access to cryptocurrencies like Bitcoin and Ethereum as part of its cryptocurrency service. The foundational framework that enables PayPal to give its customers access to these digital assets is provided by Paxos. Paxos also serves as the custodian for the cryptocurrencies that PayPal holds on behalf of its clients, ensuring their security and safekeeping. Through its partnership with Paxos, PayPal is able to offer its users a safe and regulated means of purchasing, storing, and trading cryptocurrencies.
Will PayPal cancel its stablecoin plans?
It is highly unlikely that PayPal would cancel this project, and they are more likely waiting for more regulatory clarity to proceed. The delay will give PayPal more time to work with regulators and stakeholders to navigate potential regulatory challenges.
Final thoughts…
It is highly unlikely that PayPal would cancel this project, and they are more likely waiting for more regulatory clarity to proceed. The delay will give PayPal more time to work with regulators and stakeholders to navigate potential regulatory challenges.
- CNBC – Paxos ordered to stop issuing binance stablecoin: here’s what’s going on with BUSD https://www.cnbctv18.com/cryptocurrency/paxos-ordered-to-stop-issuing-binance-stablecoin-whats-going-on-with-busd-15937331.htm[↩]
- Forbes – Paypal to launch a more stable crypto… and other small business tech news this week https://www.forbes.com/sites/quickerbettertech/2022/01/16/paypal-to-launch-a-more-stable-cryptoand-other-small-business-tech-news-this-week/?sh=50af1c67793a[↩]
